In the wake of the UK's vote to leave the EU in the referendum of 2016, establishing free trade agreements (FTAs) with the rest of the world has become a vital objective for the UK government.
In 2020 this became even more significant, to ensure that the UK economy will bounce back strongly from the financial consequences of the coronavirus pandemic.
In March 2020 the British trade secretary, Liz Truss, stated a goal of covering 80% of the UK's trade by FTAs within three years, "starting with the EU, the US, Japan, Australia, and New Zealand." She said:
"Seeking these agreements is key to our efforts to level up, deliver opportunity and unleash the potential of every part of the United Kingdom"
The USA is the UK's biggest export market. Negotiations between the UK and USA began on 5 May 2020, via video link, with a particular focus, from the UK's point of view, on securing favourable terms for SMEs exporting to the USA, by lifting US tariffs imposed on UK exports, including those in agricultural and manufactured goods such as cheddar cheese, on which tariffs can be as high as 17.6%, and cars, which are the UK's top export to the USA at $7.9bn in 2019.
Other tariffs the UK plans to address are those on textiles, which face rates currently up to 32%, and ceramics, which face tariffs of up to 32% at present.
In addition, the UK is hoping that its digital economy and professional services industries will benefit from an FTA, including new innovations such as self-driving cars and blockchain technology solutions and more traditional areas such as accounting, architecture, and legal services. One of the UK's goals is that an FTA with the USA will support recognition on both sides of the Atlantic of qualifications attained by accounting and legal professionals.
The USA is pushing to reduce restrictions on exporting its own agricultural produce to the UK, such as chemically rinsed chicken, hormone-treated beef, and genetically modified crops. This may prove a major stumbling block, as these products are not popular with the British public, and because this is a cause for concern among British farmers fearful about cheaper produce potentially undercutting UK agriculture.
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The first round of discussions, during which representatives of the UK and USA set out their goals, was held on 15 May. The second round is set to begin in mid-June, and is expected to cover all areas to be included in an FTA.
The first round ended on a positive note. According to Liz Truss, both sides:
"set out a mutual commitment to creating new opportunities for businesses on both sides of the Atlantic and to delivering benefits for workers, consumers, and farmers. This includes the confirmation that both sides will quickly pursue a standalone Small and Medium Enterprises (SME) Chapter and will continue the UK-US SME Dialogue".
Tariffs on trade between the UK and USA are already low at the present time, and, according to the UK's Department for International Trade, a UK-US FTA may boost the UK economy as a whole by less than 0.1% in the long term. However, for certain parts of the agricultural, manufacturing, and financial services sectors, reaching a deal will have a considerable impact. Once an agreement is reached, it will be a significant step for the British Government in pursuing its wider goals in international trade, strengthening the UK's negotiating position towards other FTAs with countries around the world.